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Prediction 2 Stocks Thatll Be Worth More Than Palantir 3 Years From Now The Motley Fool

Prediction: 2 Stocks That'll Be Worth More Than Palantir Technologies by 2025

In the fast-evolving world of technology investments, Palantir Technologies (NYSE: PLTR) has emerged as a standout player, particularly in the realms of data analytics and artificial intelligence. Founded in 2003 with backing from notable figures like Peter Thiel, Palantir specializes in big data software that helps governments and corporations make sense of vast information troves. Its platforms, such as Gotham for government use and Foundry for commercial applications, have driven impressive growth. Over the past few years, Palantir has capitalized on the AI boom, with its stock surging dramatically—up over 200% in the last 12 months alone as of mid-2024. This has propelled its market capitalization to around $60 billion, making it a darling among growth investors. However, despite its strong momentum, the article argues that Palantir's valuation might be overstretched, trading at a forward price-to-earnings ratio of over 100 times, which leaves room for other high-growth tech stocks to potentially overtake it in market value by 2025.

The prediction centers on two stocks that the author believes have the potential to surpass Palantir's market cap within the next year or so, driven by superior growth trajectories, expanding market opportunities, and more sustainable business models. These picks are not random; they are rooted in sectors overlapping with Palantir's—AI, data, and cybersecurity—but with unique advantages that could lead to explosive revenue and profit expansion. The author emphasizes that while Palantir's government contracts provide stability, its heavy reliance on them introduces risks like regulatory hurdles and slower commercial adoption. In contrast, the selected stocks are more diversified and positioned in high-demand areas with broader addressable markets.

The first stock highlighted is CrowdStrike Holdings (NASDAQ: CRWD), a leader in cybersecurity with a focus on endpoint protection and cloud-based threat detection. CrowdStrike has revolutionized the cybersecurity landscape with its Falcon platform, which uses AI and machine learning to preemptively identify and neutralize threats. Unlike traditional antivirus software, CrowdStrike's approach is proactive, leveraging vast datasets to predict attacks in real-time. This has resonated in an era of escalating cyber threats, from ransomware to state-sponsored hacks. The company's growth has been phenomenal: in its most recent fiscal year, revenue jumped 36% to over $3 billion, with net retention rates exceeding 120%, indicating strong customer loyalty and upselling potential. CrowdStrike's market cap currently hovers around $70 billion, already ahead of Palantir's, but the article predicts it will widen this gap significantly by 2025.

Several factors underpin this optimism. First, the global cybersecurity market is projected to grow from $200 billion in 2024 to over $300 billion by 2028, according to industry estimates, fueled by increasing digital transformation and remote work. CrowdStrike is capturing a sizable share, with partnerships like its integration with Microsoft Azure and Amazon Web Services enhancing its reach. Second, the company's shift toward AI-driven solutions, such as its Charlotte AI tool for automated threat hunting, positions it at the forefront of the AI-cybersecurity convergence—a space where Palantir also plays but with less specialization. The author points out CrowdStrike's impressive margins: its gross margin stands at 75%, and it's on track for sustained profitability, with free cash flow expected to hit $1 billion in the coming fiscal year. In comparison, Palantir's path to consistent profitability has been bumpier, with ongoing investments in R&D eating into margins. Moreover, CrowdStrike's customer base is diverse, spanning Fortune 500 companies, governments, and small businesses, reducing dependency on any single sector. The article cites recent events, like the global IT outage linked to a CrowdStrike update in July 2024, as a temporary setback that actually underscored the company's critical role in infrastructure—leading to even stronger demand post-incident. By 2025, if CrowdStrike maintains its 30%+ annual revenue growth, its market cap could easily exceed $100 billion, leaving Palantir in the dust unless the latter accelerates its commercial deals dramatically.

The second stock predicted to outpace Palantir is Snowflake (NYSE: SNOW), a cloud data platform company that enables seamless data storage, sharing, and analysis across multiple clouds. Snowflake's "data cloud" model disrupts traditional data warehousing by offering scalability, flexibility, and pay-as-you-go pricing, making it a go-to for enterprises handling massive datasets in the AI age. Since its IPO in 2020, Snowflake has seen its revenue skyrocket, with fiscal 2024 figures showing a 36% increase to $2.8 billion. Its current market cap is about $45 billion, slightly below Palantir's, but the article forecasts a reversal by 2025 due to Snowflake's explosive growth potential.

What sets Snowflake apart? Primarily, its architecture allows for data silos to be broken down, facilitating AI and machine learning applications that require clean, accessible data—directly competing with Palantir's analytics strengths but with a more neutral, infrastructure-agnostic approach. The company has forged key alliances, such as with NVIDIA for AI workloads and Salesforce for CRM integrations, expanding its ecosystem. The author highlights Snowflake's product consumption model, where revenue scales with usage, leading to high predictability and upside. Net revenue retention rates are around 130%, signaling that existing customers are spending more over time. Additionally, Snowflake is venturing into AI with features like Snowpark for custom ML models and Cortex for natural language processing, positioning it as a foundational player in the generative AI boom. In contrast to Palantir's sometimes opaque, contract-heavy business, Snowflake's SaaS model offers faster scaling and lower barriers to entry for new clients. Financially, while still unprofitable on a GAAP basis due to heavy growth investments, Snowflake is approaching breakeven, with adjusted operating margins improving to 5% in recent quarters. The article projects that if Snowflake hits its guidance of $10 billion in product revenue by fiscal 2029, with 30-40% annual growth in the interim, its valuation could balloon to $80-100 billion by 2025, especially if AI hype continues. Risks like competition from Amazon Redshift or Google BigQuery are acknowledged, but Snowflake's multi-cloud neutrality gives it an edge.

In wrapping up, the article stresses that both CrowdStrike and Snowflake embody the next wave of tech innovation, with moats built on AI integration and data-centric solutions. Palantir, while innovative, faces challenges in scaling its commercial segment amid high valuations. Investors are encouraged to consider these alternatives for potentially higher returns, though with the caveat that stock predictions involve uncertainty and market volatility. The picks are framed as long-term bets on the digital economy's expansion, where cybersecurity and data management will be paramount. By 2025, if macroeconomic conditions favor tech growth—such as continued AI adoption and stable interest rates—these two stocks could indeed eclipse Palantir, rewarding patient shareholders handsomely. This analysis underscores the importance of diversification in high-growth portfolios, looking beyond current hype to underlying fundamentals.

Read the Full The Motley Fool Article at:
[ https://www.fool.com/investing/2025/08/09/prediction-2-stocks-thatll-be-worth-more-than-pala/ ]